Shifting Health Coverage Models Reshape Delivery of Care
In 2002, the Harvard Business Review published an article declaring that it was time for consumers to take control of health care, arguing that putting more information — and more choices — in front of consumers would help transform a broken system.
“When consumers apply pressure on an industry,” the article said, “whether it’s retailing or banking, cars or computers, it invariably produces a surge of innovation that increases productivity, reduces prices, improves quality, and expands choices.” More than a decade later, it appears that consumer-driven health care is becoming the new reality.
Consumers have begun to make decisions that will have a long-lasting impact on utilization and delivery of care, decisions like opting for health savings accounts (HSAs) over traditional insurance.
The Rise of the HSAs
At the beginning of 2014, the Employee Benefits Research Institute (EBRI) announced findings that health reimbursement accounts (HRAs) are on the decline while HSAs are on the rise. EBRI research indicates that HRA accounts fell from 5.1 million in 2012 to 4.7 million in 2013, while HSAs increased from 6.6 million to 7.2 million in the same time period.
It is a natural shift as consumers take on greater financial responsibility for their health care costs as HSAs differ from HRAs in four important ways.
- Ownership. An HSA is owned by the individual; an HRA is owned by the employer. When it comes to portability, therefore, HSAs win.
- Funding. Both the employee and the employer can contribute to an HSA, whereas HRAs can only be funded by the employer. When it comes to control over how much money is allotted to health savings, HSAs win.
- Funds Availability. The funds in an HSA are contributed on a monthly basis, while the full amount of the funds slated for an HRA are available at the beginning of the year. This makes sense, given that HSAs are portable, enabling employers to limit risk in the event that employees leave. When it comes to funds, the advantage goes to HRAs only if an employee experiences a large medical expense early in the year.
- Coverage. HSAs and HRAs can be used to cover the same expenses, so when it comes to coverage, HSAs and HRAs finish in a dead heat.
According to research by the HSA Council of the American Bankers’ Association and America’s Health Insurance Plans, this is an ongoing consumer-driven health care trend.
Data shows that the number of individuals opening HSAs in 2012 doubled over 2010 numbers, indicating that “consumers are more aware of the value offered by HSA and are more comfortable using them to manage their health-care expenses.”
The research also found that 80 percent of accounts have balances that can be rolled over into a future year, and among accounts with positive balances, personal contributions exceeded employer contributions, indicating that consumers are planning for future medical expenses.
High Deductible Insurance Plans May Increase Use of HSAs
Many individuals who opted for low premium, high deductible insurance plans on the ACA-established health insurance exchange last year discovered the pitfalls of their choice when faced with the challenge of meeting those high deductibles throughout the year. And health care providers were negatively impacted as well when patients found themselves unable cover the costs incurred.
Health care-related organizations, among others, may want to encourage use of HSAs in order to minimize the risks associated with uncompensated care.
With greater awareness, consumers may opt for health savings accounts — available both through employers and to those with high deductible insurance plans — as a way to better manage the incidental costs of visits to primary care physicians, as well as unexpected hospitalizations.
But awareness is not enough. Understanding is necessary for consumer acceptance and advocacy of HSAs. Many consumers will simply avoid something they do not understand rather than take the time to learn about it. Confusion and misperception are barriers for many others. To educate consumers about their options, organizations need to understand how best to communicate with them — and a one-size-fits-all solution may not be effective.
In a consumer-driven health care environment, providers need to understand individual needs and attitudes to ensure they provide the right messages via the best channels to reach their target audiences. Pyschographic segmentation goes beyond demographics and behavioral segmentation to reveal the unconscious motivations and attitudes that drive behavior. Psychographics also hold the key to persuasive messaging and patient activation.
In what now seems a prophetic statement, the Harvard Business Review said, “Individuals are highly motivated to educate themselves about their health, their insurance, and their care and to shop responsibly, seeking the most value for their money.”
The challenge for health care-related organizations is to connect with these individuals in meaningful ways. Download the c2b solutions whitepaper to learn how our proprietary psychographic segmentation model help you succeed in a consumer-driven health care marketplace, or contact us today.